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20121220
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CNBC
Dec 20, 2012 6:00am EST
plaquerock unusually today. peter joins us from the jeffries trading floor today in new york. peter, you have a lot of different scenarios, but the most likely scenario that you think is that the blackberry fails, there is no acquisition on this and the cash firm continues? >> yeah. we think it costs about $1 billion to launch these devices. if successful, we think an access possibility goes up. if not, we see the company become much, much smaller a year from now. >> how do you measure success? and when we we know on this? >> we'll probably know around around/may next year. success would be call it 3 to 5 million units in the first quarter out of the gate and 5 million units plus after that. to us, that would be a very good launch. >> for anybody who is actually a blackberry user still, what do you say about these things? if there's a takeover, does that mean blackberry continues? what's the long-term outlook for the company? >> i would suspect that if you're a blackberry user, there's very little chance that your service is going to be cut off. that is a key cash flow driver for th
CNBC
Dec 20, 2012 2:00pm EST
. >> matt, i don't know what it is like there but around here we see houses an apartments in new york go for more than asking. we have heard the same about miami. and some of the other hard-hit markets as well. does that worry you? >> it doesn't worry me. i think it is a good sign. over the past 24 months or so, the only people sold are people who have had to sell. prices are down 30 or 40%. you're not selling homes at those levels unless you have to. quality inventory is way down. rate are good. economy is getting better. people want to buy. you will see multiple offer situations. you will see prices go up. >> i sound like a broken record here. we talk about the fact that mortgage rates, yes, are at historical lowers and so many people feel it is difficult to qualify. some have slightly higher mortgage rate and make it easier to get a loan. i think the mortgage rate and i'm not sure that the case. higher rates definitely affect. consumer balance sheets are stronger. in terms of getting a conventional loan on single family home, it is a very difficult process right now. i just went throu
CNBC
Dec 20, 2012 4:00am EST
inflation target going forward. >>> coming up on today's program, we'll head out to new york and take a look at housing figures in the u.s. it looks like the real estate sector may be moving on up. here in london, will be picture be so optimistic? mortgage and retail figures out later this morning should give us an indication. >>> plus, in a global exclusive, cnbc's geoff cutmore speaks with alex ushmanov on his return on facebook, and his outlook for the xwloeshl economy. >>> welcome back to the program. it's been a busy year. after 12 months of uneven growth, the prospects for 2013 look equally uncertain. billionaire investor and russia's wealthiest man alisher usmanov told cnbc's geoff cutmore that rebalance of growth is need. >> 2013 will be a year where we need to search for solutions. there is a big discussion going on about the state of the global economy. everyone is involved in that debate, in that discussion about wa to do. governments, central banks, economists, businessmen, scholars. so as far as i'm concerned, what really worried me and what i think is the real cause of the
CNBC
Dec 20, 2012 3:00pm EST
the "closing bell." i'm maria bartiromo at the new york stock exchange. the house of representatives voting right now. they have a number of measures to vote on before speaker boehner's plan "b," but we'll continue to monitor capitol hill for any developments. meanwhi meanwhile, i'm here with scott wapner. the market modestly higher despite uncertainty over a fiscal cliff deal. new information coming up in moments. >> good to see you again. scott wapner in today for bill griffiths. less than one hour to go in this trading day. the dow is positive now, just off the highs of the day. good for 39 points. nasdaq's higher, s&p is higher as well at this point. all eyes certainly on the nation's capital though today, maria, and here at the stock exchange. >> absolutely. first, here is what we know. global exchange officials right now are discussing how to respond to an $8.25 billion deal announced today between the new york storage and intercontinental exchange. there's been informal discussions with the stock exchange about a deal as recently as last week but the nyse, afraid to have anoth
CNBC
Dec 20, 2012 5:00pm EST
fiscal cliff, and your money, right now. live from the nasdaq market site in new york city's times square, i'm melissa lee. rally in motion. we're hitting the after hours action in rimm as the shares surge. should you keep betting on blackberry 10. plus, which economy is the best bet in 2013? jpmorgan's chief economist has his top pick. and we're debating the big deal of the day with the bull and the bear case for the nyse ice. but let's check out where the traders stand before we hit tomorrow's session. so, steve, buyer or seller today? >> i think you have to lighten up on a lot of the positions you've had some profitts in. it's really prudent to start peeling off the winners, because we're still waiting on fiscal cliff, as everyone knows. i think the market is poised to sell the news event here. i don't know if we're going to have a news event to sell. >> right. just because you sell those winners doesn't mean that you can't still be in the trade, correct karen? a lot of people are receiving but re-entering the trade. >> this is a strategy you normally never do, realize, especially with
CNBC
Dec 20, 2012 1:00pm EST
as to figure out the right gift from your selections and the person i'm giving the gift too, has new york work to pick out the gift too. >> we make it far easier than going to the store it find a gift. second we find a lot of time finding product you don't find in retail. >> what you would find in a small boutique but we have thousands and thousands of products. >> your concerns and questions for john, patrick? >> john, congratulations. it used to be giving one gift to one person. is this working? do you see return rates lower than traditional model? >> our return rates are almost zero. it is remarkably low low. >> final question to you. >> john, receiving kmod advertised these days. how do you find the rarite snems. >> that's a big part of what we do. we have a team of brilliant buyers who scour the product that you haven't found anywhere else, that aren't the can kinds of things amazon would typically carry because they aren't in large quantity. >> julia, first to you then. >> i will be spending a lot of money this holiday season but i would say as look at this as an investor, and
CNBC
Dec 20, 2012 9:00am EST
harry, during one of the breaks, talking about greece. you had an unconventional view, i think, of what's going on there. >> still tons of issues, major risks but i think finally some signs after five years of decline, it is starting to bottom. first, the eu demonstrated they will do anything to keep power, partly because he has made some progress and partly because the alternatives are scarry. finally seeing improvements in the budget deficit numbers. >> you are buying stuff? >> looking at stuff. finally start to see investors move in 2013. already seen government bonds in 2012 and i think you will see asset sales. >> you agree? you remember your name before -- >> that does it for us today. make sure you join us tomorrow. right now, time for "squawk on the street." >>> good morning, welcome to squawk on the street. i'm carl quintanilla, melissaly, jim cramer. nyse euro net selling itself to ice for 8.2 billion in cash and stock. david is here to break it down. >> go through some of the numbers four. the deal itself having been officially announced in the last half hour or so board signing off, call it about 8 a.m. eastern time. my sources tell me this all began a couple of months back when jeffrey spraker, the ceo of ice approached duncan niederauer, the ceo of the stock exchange about a potential deal. looking forward hearing from both men later in the program. as for the deal itself, if you're a new york stock exchange shareholder, mr. spreker built this account the past decade. 36% of the combined company will be controlled by current new york stock exchange shareholders. you get a premium. also an opportunity to participate in the continued growth of what will be a trading ba he months. they trade stocks. energy, interest rates, commodities, agriculture, that's what it's bat. global platform for the trading in so many different asset classes, particularly as it relates to derivatives, putting these two companies together this way. cost synergy is very important. $450 million what they are looking for. say that will take place after the second full year, realizing all of them but almost 80% within two years of closing. that's related to technology savings. clearing duplicate expenses, one public company instead of two save money. there are going to be some job losses one would anticipate here as well. women see how ice shares do today, of course, a growth company, so in growth shareholder sort of hands. will there be change today? people trying to figure out what do you do with the multiple? great cost synergies, slower growth, jim. so the question becomes what is the multiple of ice going to be in a year? 15 now is it 13? interestingly, the two companies do about the same number with ebidta. so clearly is a multiple differential enabling ice to be the acquirer waters its market value higher as a result of that hire multiple. >> nyx never cut the dividend. it has been bountiful. i want to talk about two words, upstart and venerable. what do you do about the idea a 12-year-old company is taking over a multiple 100-year company. what do you do, by the way, with this, all around us? is it just expensive overhead? >> it maybe overhead. it may be expensive, but not going anywhere. they are committed to this listen, politicians play an important role in these things have a dual headquarters, by the way, the company. >> really? >> atlanta is where ice is based that will still be most likely where the heart of the organization is. >> okay. >> but they are talking about dual headquarters. duncan niederauer will continue to run the nyse. ellen president of this new company as well. >> cnn model? >> yes. >> exactly. >> dodd frank echanges have mor power. sunlight plan. >> derivatives, markets in particular something they will benefit from the creation of so many more exchanges or addition of a lot of different instruments. >> ice trading up significantly. >> yeah. that's very interesting. again, we know ice was interested in the derivatives business to begin with, the new york stock exchange. remember, they partnered with the nasdaq in that ill-fated bid for the nyse when the nyse had a deal of its own to be acquired by or merge with deutsche borse. that much more a merger of equals. here, four board seats, expanding the ice board to 15 from 11 they will add four board members. no reason do this. this is an acquisition, not a merger over equals. >> all about the growth in the derivatives business, slow down in the cash equities business where the volumes are drying up, the margins are getting squeezed and we don't know when that business will return, several years or if there is a secular change in the way people trade now. this is the latest extrapolation of that story we have heard so much this whole year. >> these are all together the get-go deal for night. who has the power? who's the customer? who is going to make money off of trading? is trading equities just a vestige of futures? >> will it ever come back? will it ever come back? see normalized? >> ice want the equity business, david? >> they do >> they say they want it. say they are still in it. euro next over in europe, they are going to potentially take public, not a part of their plans, per se, in terms of just including it. here in the u.s., they still want the straight equities business. der riff city was the key. >> people want to believe this is not going to be the latest in a chain of squelch deals, denied deals. you think this one -- >> this one does not appear to have any hair on it when it comes to antitrust. >> nationalism. >> two u.s. companies. two u.s. companies. unless you want new york versus atlanta. that could be -- >> we did that. >> atlanta, the financial capital of the world. not the same ring to it. >> oracle buys a company. yesterday, merkel buys a company. today -- >> angela merkel bought a company? >> play that out. the insurance business. gardner denver perhaps. david -- >> yeah. >> this is deal mania. >> mention arris, trading up again, double the size of the -- what is happening? >> ge this week. >> potentially, the italian enginemaker. >> the fiscal cliff, result supposed to be frozen? aren't we supposed to be paralyzed? >> i guess the clock ran out on everybody saying we can't do anything? >> this is huge for us. >> i don't have a legitimate answer for you. none of these transactions are going to close this year, not a result of let's get something done by year end to avoid capital gains. >> something changed in people's attitudes, david. >> pent up demand for dealmaking that's been there. maybe a reflection that okay, going to get something done and so i feel a little bit better as a ceo in making a decision. but a lot of these have been in the works for some time but it is very interesting, jim. i don't have a straight answer. >> i'm going to buy -- i want to buy -- m and a, a huge profit. coming back. of of >> common threads of stock using the deal the percentage of the total, people using the stock because they feel their stock is at a valuation i don't want to say is maybe peaking -- >> i haven't looked at the numbers but no appreciable increase in the use of stock in terms of deals as opposed to cash. we know that cash is extraordinarily cheap right now. we have been wondering why there wasn't more dealmaking. don't want to make too much of it. this is still going to be a very poor year for merger and acquisition activity. we will be speaking to the global head of m & a at morgan stanley at 10:40. we will ask him. but this does line up well for next year, when it comes to merger activities. we will keep a close eye on ice shares, stock exchange shares this morning. we are expecting to speak to the two gentlemen behind the deal, duncan niederauer, jeffrey sprecher, as well. you there see it >> >> incredible all this is happening with the chaos in washington. >> do expect to close this deal second half. final question, the cme works they consider doing anything, coming in over the top? highly unlikely. my sources say because of anti-trust certainly in one way. didn't the first time when there was up potential. that is not expected. this deal is expected to make it to the finish line. one never knows. two shareholder votes needed. ice and nyse. >> fabulous reporting. first to get the deal price. well done. >> topic of conversation in this room this morning. as jim mentioned, futures on the rise a day after a concern about the fiscal cliff talks weighed on stocks. the batlogical escalate today. the house set to vote on boehner's so-called plan b. keep taxes from rising with people i incomes below $1 million in the event no deal is struchblg the president will veto the bill if it passes congress, he says yesterday, take me out of it take the deal. that was followed by the speakers a famous now -- by now famous 59-seconders were. jim, your point about big changes of control, these big disposition of assets happening, corporate america decided we can't wait and not going to wait. >> corporate america decided let's turn those guys off, make some money, do things right. i was looking at the press conference, now come up with a new way to look at press conference. boehner come up, short the s & p. said listen, my advice to you you shouldn't talk there is no deal the other 99%, should say guys, short the s & p. president comes on, short am, right? isn't this what happens? what is playing out. every time one of the guys comes on acre the market goes down. hey, memo to speaker boehner and president obama, could you give us a couple days off so we can actually trade here? >> two straight days of gapes, the s and p fell the most in five weeks in yesterday's session. not like we have been saying the markets want to drift higher, immune to the headlines, at the end of the day you watching this extremely closely in terms of the developments, will we reach that deal, 11 days and counting? >> people pointing to claims this morning, these very co-incident indicators, if there's no deal, you will see claims fight in a hurry, as businesses start to prep for what will -- what we can anticipate will be a back lack of demand. >> couple that with ex-spir rakes of the payroll tax cut, a lot of chat ber that this morning, an article in i believe the "journal" or "the times," average tax bill for a family, average household making $50,000 would be $1,000. taxes would go up by $1,000. most people in that tax bracket believe that their taxes won't be impacted. but they will. >> paid monthly, some people every other week. there will be two waves. this is my super bowl theory, that we will get a deal by the super bowl, because then everyone has got an paycheck and realized how little they make. i don't know necessarily who is going to be in the super bowl. i know one of your teams is not. but i do believe that things will get resolved by then we don't get it done next week. one of the things that has always been the case in this business not supposed to have any news, a silent piece no downgrades next week, no blowups, but the president and speaker boehner don't seem to understand the ket of wall street. >> got other things on their minds. >> you think so? >> maybe. >> like the republic? >> let's talk about some of the tech news, we have a lot to contend with this morning. stern agee listing ibm one of the top picks for 2013 citing big blue's unique business model, recurring profit streams and underappreciated product ask. as for apple, bernstein lowering its price from $750 to 800 a schaffer the firm sees apple's ability to beat earnings expectations as less certain. on top of it, blackberrimaker research in motion set to report earnings after the bell. shares of r.i.m. have lost -- almost doubled in the past three months, after coming off of a low there. where do we go first? we look at apple, for instance, premarket trade. >> this is the steve jobs/walter isaacson book. unless they have an omg product, won't like them. accenture last night, disappointing. i expected more frock accenture. accenture, ibm, oracle, and sap. accenture losing share of these companies? everyone feasting off of hewlett-packard's consulting business. >> a busy night for earnings, r.i.m., nike, "journal" this morning talking about nike -- easy to forget wasn't that long ago, nike seemed immortal, seem they had could do no long. that changed in a hurry. worries about r.i.m., consensus is a loss of 35 cents. everything pipped, jim to this blackberry ten. >> one product, i think they have done a lot of rationalizing on the cost side. nike went from being this terrific chime story with north america not doing that well to suddenly, an inventory glut of shoes with china, maybe north america can make up with it. nike remains a great growth company, a lot of cash, good dividend. i think if it gets hit, unless they can -- remember, china is coming back. so, theoretically, that's what the stock market upped the most since august 2010, it comes back, then nike represents great value. >>> when we come back this morning, a lot more on that deal of the day intercontinental exchange buying the nyse parent, nyse euro next, a live interview with the ceos of both of those companies. meantime, take one more look at futures after the worst day of the month yesterday. futures rebounding a bit. a lot more from squawk on the streets, post nine, at the nyse, when we return. st >>> herbalife is one of the stocks to watch this morning after bill ackman says he is shorting the stock, calling you the company a pyramid scheme. ackman will outline his herbalife argument at an investment presentation in new york city herbalife ceo defended his company yesterday on cnbc. >> this is about bill acman's business model. this appears to be an attempt to legally manipulate the market by short sellers. here is what we know, give it to you quickly. an extraordinary number of puts due to expire this friday. learned this activity was pegged at some kind of "significant event". >> mr. ackman suddenly announces he will make a presentation on herbalife on thursday, the day before the puts expire. now we know what this has been going on for, in the shadows, as we say is for the last eight months. this has been ridiculous, what's happening here. >> fascinating exchange of words and thoughts between mr. johnson and mr. ackman because after that interview, bill ackman talked to kate kelly and said he is not in any sort of options strategy. yes, there was unusual activity in the terms of the puts that expire this friday but as for mr. ackman, he says he is not involved with any of those. >> is it possible that other people could be aware that he was going to do something like this? >> the question is that illegal? it is not. if bill ackman said -- if i'm bill ackman, jim cramer, imcome out with a neg tifr position on herbalife, you can go out and do whatever you want with that? >> yes. now, obviously, one of the things that you know about, there's a fomentation rule in 13 b. driving the stock down, someone to could say it is manipulation. johnson may not have his facts right. johnson has been on "mad money" a number of times. this is a total battleground. merrill lynch reity traits does make a lot of money. herb greenberg done fabulous work here. in the end, ackman is saying all they are doing is selling product from distributor to distributor and that is a ponzi scheme because it doesn't end with customers, a la tupperware. >> 90% of the sales going out to customers, not staying in that channel. >> i want to be even keeled here, that johnson did come on, brian sullivan and mandy, go did come on street signs, didn't duck it did come out on the offensive, he was passionate in the way he defended his company. this, to me, is the old battleground. i really know that if individuals get in here, it's what i call int thintercity,al . >> look at the stock charts, multilevel marketing in nutritional supplements, same stock charges, new skin, companies that continually draw the attention of short sellers because of their marketing model. whether or not there is any basis in fact, all thrown out at the same time. >> ackman, say he has definitive evidence a lot of product that never went and the lieberman study johnson refers to is wrong, obviously, i think the stock could get hit again. i think he better deliver something today after what happened yesterday. >> he is going to be on cnbc, presenting at the sewn conference, before or after his were presentation, might be around noon, before noon, all up to bill, happening this morning on cnbc. >> there is a synergy. people come on our network all the time and say they like x. i own x and i like x. here is a guy who says i'm short it and i hate it. so you could argue mirror image. that's fair game. >> all the same. >>> last night on "mad money," cramer spoke about what your investment mindset should be doing 2013, how should you make a money for profits in the session? jim's mad dash is next. >>> later, the countdown is on. stick around to see which stock is among the worst traced of 2012. well, if it isn't mr. margin. mr. margin? don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know. omnipotent of opportunity. you know how to mix business... with business. and you...rent from national. because only national lets you choose any car in the aisle. and go. you can even take a full-size or above. and still pay the mid-size price. i could get used to this. [ male announcer ] yes, you could business pro. yes, you could. go national. go like a pro. >>> you know it is going to be interesting when snoop city on the floor. time for the mad dash. talk con-agra, stock close to 13-year highs lately. >> jerry rod kin an amazing ceo, one of the best consumer -- one of the best consumer packaged goods men i have he ever seen. moving aggressively a private level. go to a supermarket, whole foods, cost co-you see their private label. conagra is going to be king of that slim jims, popcorn, a lots of good things, hebrew national. i feel this company is on the move, probably the most aggressive of all the packaged goods companies we see now. >>ed food business volume is lower, making up other ways? >> big acquisition, big road map, a big dividend. i have to tell that you this company was an also ran company. rod kin has reignited it. a lot of inflation costs, inflation's under control. i like this man. i think he has done a remarkable job. >> let's talk all scripts. >> a different one. glenn tollman out as ceo, not doing great job, he was trying to sell the company. it does seem to be one of these situations where a lot of people, a lot of hot money was in it. this is a name in my sell block on "mad money." why? 'cause i didn't think that this business, which is again cerner is doing as well. this turned out to be a bust. i don't want people to come in, even at $9. >>> a lot to cover, individual names we have not gotten to yet. when we come back, as we said, ice and the euro next up sharply after the big deal announced this morning. stay tuned for a first on cnbc with both of those companies. >>> and shares on a roll since the parent of caldwell banker and century 21 went public two months ago. we will talk to richard smith about the housing recovery and what is at stake for his company. the opening bell is coming up next. don't go away. i always wait until the last minute. can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery. ♪ [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. >>> welcome back. i don't know if you can see the opening bell balcony there, that is snoop pand live dogs as we welcome p & g. looks like a schnauzer, a small labrador. >> [ inaudible ]. >> they spend on their pets. one name we have not mentioned yet, bed bath & beyond, sales fall short and sandy keeps getting blamed. >> it is decelerating. people feel it is amazon or sandy. now getting cheap. 55, 56, i would not sell it. i feel like in the end, [ inaudible ] [ bell ringing ] there they are, at the opening bell. top of your screen is the s & p 500. down at the exchange, pet care brand u can tube in ba and canine companions for independence providing highly trained dogs for people with disabilities.ompanions for inde providing highly trained dogs for people with disabilities. >> intercontinent, ice, a day -- what happened? there's a dog up there. >> what's the question? >> we used to -- the bell used to be big companies ringing. i mean, is this an anachronism, david? >> you want to come back to this? >> 200-year-old company gets bought by a 12-year-old company. is mr. mcdonald there? i don't see him. maybe is there a little irony here, going for an ironic touch. >> looking for significant cost savings in this merger. we have been saying 450 million. we take a look at dogs. 150 million of that is inclusive of cost cutting under way at the nyse, part of their plan to cut $150 million in costs. as for the floor, i leave it to you to determine might be the best. we can ask both men, do seem committed to maintaining the operation of the floor of the new york stock exchange. >> behind you. >> there is some headlines also from ice. the equities business will provide solid earnings and good cash flow. there it is again. reaffirmation they are committed to the cash equities business, which is good news for everybody down here. >> dow jones, tremendous upside seen for stock trading. >> yeah. the operating margins, ebidta margins for both of these businesses, man, lucky to have them. still 50% of margins for the nyse. still a hell of a business. >> i agree. >> interestingly, cme group, still number one, combination make it a distant number two. cme is higher today as well. so, not too much of an impact. >> trying to keep up with all the stories going on, supposed to be a holiday period. >> other acquisitions we talked about, arris group buying up -- >> a huge story. >> from google. arris 52-week high in today's session on the back of this acquisition. they are the acquirer. they are up more than 7%. fascinating how the deals are translated into the market. >> issuing 15.7% of arris will now be owned by google because they are not just buying this with cash. >> no. >> they buying it with stock as well. the purchase price alone in excess of arris' market value. >> $1 billion in excess. >> overall price tag. you can start -- take the 14 billion that google paid for motorola mobility. now we can take it down by 2.3. >> what's interesting, david, over and over again, you swhad is google doing with a set top box? >> now we know. >> the answer, getting rid of it. >> oracle and ehlo kwa, acquiring ehloey, 871 million. you look at ehlo quarks wept public in august at 11.50 t is going out at 23.50. a timeframe of, what, a few months? >> certainly better than your cd during that period. all the e-companies that oracle had, incredibly good conference call. oracle a great acquirer and going to be, again, people will raise numbers, oracle. >> i will lumalumme minute nah. it is a 52-week high, up by 6.25%. >> just okay. >> private equity going to china. i guess they are into private equity. do they have carried interest thing in china? >> all carried interest. >> the whole country is carried interest. >> all state-owned enterprise carried interest. >> retail, jim, is among the laggards today. bed bath the worst performer. mentioned that earlier. kohl's, macy's, target, penne, game stop, nordstrom. des started off a little soft. if claims spike up a bit, maybe the month doesn't end the way some people wish it had. >> gift cliff, way too warm, natural gas, what was the statistic you gave, an anti-retail statistic. >> about new york city? >> yeah. >> 2012 on track to be the warmest on record. average temp, i think 57. 57 degrees. >> i don't wear north face when it is 57. >> our ugg boots. >> i think north face -- >> i don't wear ugg boots in any season. >> but do you have a combination of sandy taking out a lot of november, warm weather, what i call the gift cliff, falling off the gift cliff. we need some cold weather between now and next week. just -- >> coat sales? >> no, because clothing sales, remember if you are a department store, you take in all of these warm coats, you're going to have to discount them, sweaters, discount them. that's whyry think these things -- >> yeah. the plain states are finally going to get some snow. chicago, michigan, all those midwestern states, now bracing for a big storm but come a little bit late. >> global warming. that's what people are saying. >> let's check in with bob pisani here on the floor this morning. bob, have you met snoopy yet? >> hey, no haven't met snoopy. everybody here distracted, i think a little news everyone is talking b try to answer issues, people want to know what is going on here. the deal reflectsed diminishing value of the stock trading business and the higher value of the derivatives business. when i say diminishing value, remember the nasdaq ice bid that happened in april 2011? 4253. today's deal, 3312. that's not lost with anybody. a higher p, market cap here. what is going to happen to the stock trading busy in know what they are saying what is really going to happen? a lot of the betting, they will spin off the european part of the cash equities business, retaint u.s. part. however, that does not mean that in the future, you couldn't having? happen. you couldn't spin it off, ipo it in the future, even having current management retain control of that, a completely separate entity. some of the things talked about. what would be the possible buyer of the cash equities business? you think about it, a direct edge, competing exchanges. they want listings, said so. i can't imagine they would get the money to do that i think that would be a problem. the other obvious wires, the london stock exchange and, of course, the deutsche borse. all this is all still floating around here. answer a couple other questions, are there fewer players thought? it is a combination irk not a consolidation. ice is not an equities exchange. but it will definitely help the valuations. remember all of this consolidation, this wave of the consolidations a year, two years ago, a grinding halt when they fell apart. the singapore australia deal fell apart, nasdaq, ice deal fell apart, nyse deutsche borse fell apart. all the problems with regulators caused the deals to stop. now speculation that this will help overall valuations of these exchanges and you may start seeing some more consolidation going on. that's, i think, the one side effect we are going to see here. what is the world going to be like right now? i think you are going to find intensified competition between the new york stock exchange and the nasdaq. for the nasdaq, for nasdaq, this mean a lot of opportunities. going to have an angle to argue that they have for years that the nysself. a dinosaur. see, they are moving in our direction anyhow. let's come with us and i think that's going to represent an opportunity for them. remember the nasdaq just acquired thompson's issuers service platform, a big thing. they provide press releases and investor relations tools for companies, a big thing, moving to compete heavily with the nyse on that front. how about the impact on individual investors in look, obviously down here, a good deal for individuals who are owning the nyse stock, average investor, i think the impact will be minimal. the bottom line here is company deal right now, most people here, just from a business point of view, view this as an excellent deal. guys, back to you. >> thank you so much. >> good morning, jim. >> of course, everybody has been handicapping the selling that ensued and was sped up some extent with the conventional wisdom of a hawkish fed statement t has mod rated. >> the highest yield close on a ten-year 1.82 on tuesday, this move, still fell short by about four basis points of where the ten-year closed out last year around 187. so, you can see the chart, but here's what is fascinating. if you look at a one-month comp between our ten-year and the bund, that is rising. the bund rates are stubborn with the rates moving higher leads me to believe and confirms in my mind anyway that it is more of a year-end convenient. think about mutual fund flows this country, fixed income and equities for 2012. all about the dollar yen, the bank of january two-day chart shows you as their decision was coming out, you see what the currency did, it really rally i had the dollar -- the yen rallied quite strongly. put perspective on t you taupe up to march we will, at the highest levels since april. wow, that's big. however, remember they are an export economy, not runaway from weakening the currency, that is the whole point, open up to a 20-year chart, boy, does that change the dynamics. . that would lead one to think, the dollar rallied quite a bit, probably a bit more room on this trade from a longer term perspective. melissa lee, back to you. >> thank you. >>> coming up you can how will the merger deal transform the market landscape? we will speak to ceos in an exclusive next. >>> we head to break, look at this morning's early movers. ♪ ♪ [ engine revs ] ♪ [ male announcer ] oh what fun it is to ride. get the mercedes-benz on your wish list at the winter event going on now through december 31st. [ santa ] ho, ho, ho! [ male announcer ] lease a 2013 e350 for $579 a month at your local mercedes-benz dealer. [ male announcer ] lease a 2013 e350 for $579 a month excuse me, sir i'm gonna have to ask you to power down your little word game. i think your friends will understand. oh no, it's actually my geico app...see? ...i just uh paid my bill. did you really? from the plane? yeah, i can manage my policy, get roadside assistance, pretty much access geico 24/7. sounds a little too good to be true sir. i'll believe that when pigs fly. ok, did she seriously just say that? geico. just click away with our free mobile app. >>> welcome back to "squawk on the street." snoopy's over at the nyse. here at the nymex, watching gold, started a bit higher overnight. gold has sort of been acting in opposite reaction to the progress or lack of it on the fiscal cliff, but things turned down once again after we got that data this morning. interestingly, the performance for gold for the quarter earthquake the worst since the fall of 2008. and there are reports on reuters citing unnamed sources that that is having an impact on paulson's funds and he is seeing liquidation because he is so heavily weighted in gold that his hedge fund has performed poorly. as far as the rest of the commodities complex, seeing a move back, a number over these commodities are technically weak. copper trading below both its 50 and 200-day moving average. silver on track for a sixth day of decline. finally, talked to the folks at cme to try to get a reaction from them with regard to that ice nyse deal no comment from the cme group. carl, i can tell you that certainly is the talk of the day here on the floor of the nymex and a lot of folks say it is a very impressive move on the part of ice. back to you. >> talk of the financial world. as far as gold goes -- >> interesting, already the apocalypse in new zealand and yet gold is plummet egg. does not make sense. six in 60, six stocks in 60 seconds. >> key assets, 6 billion, the balance sheet and make it better, but lost 31% of their production. >> paychecks missed on revenue. >> the company on tonight. does have a 4% yield. paying to you wait for a turn in the economy. don't have one. >> barclay's buy on home away? >> people understand this is bed and breakfast.com. i know this because this is a principal source of all our bookings at my inn in summit. >> black rock, jpm black rock? >> yeah, there is a tremendous amount of money coming to these funds because of the change in the fdic rules, i think an inexpensive stock. >> merck? >> a terrific statin drug, people looking forward to them doing this statin combination, not going to be applied. a lot of people take statins, a big move to keep cholesterol longer. >> jay bill? >> have them on tonight. maybe it is back, contract manufacturer, they are doing demand manufacturing and a duel on health care now. kenny main. >> mad later, you are not going anywhere, right? >> right. >> stick around. coming up, ceos of the nyse and euronext on their big deal. ♪ [ male announcer ] you build a reputation by not breaking down. consider the silverado 1500 -- still the most dependable, longest-lasting full-size pickups on the road. and now we've also been recognized for lowest total cost of ownership -- based on important things, like depreciation, fuel, and maintenance costs. get 0% apr financing for 60 months plus $1,000 bonus cash. plus trade up for an additional $1,000. from outstanding value to standing the test of time, chevy runs deep. >>> welcome back to squawk on the street, joined by jeff sprerk, ceo of intercontinental exchange and duncan niederauer, ceo of the new york stock exchange. a cash and stock deal worth roughly $33, a bit more now, per new york stock exchange shares, given ice shares are actually up. gentlemen, nice to have you here on the floor. duncan, let me start with you. >> sure. >> my understanding is mr. sprecher approached you a number of months ago, conversations began. when he approach ready you at the time, give pun the previous history where you have been part of the potential hostile for the new york exchange, why did you say, all right, i will talk to this guy and what were you thinking when the approach was made? >> a lot of questions in there first of all, we have known each other for a long time. we like each other and i think our attitude is business first, right? so it was business last year. i understood why jeff was doing what was doing. he understood what we were trying to do we have been friends, we stayed friends and if we put our shareholder value creation hats on, this was an easy discussion to have, right? we always thought we would be good partners for each other and the timing was finally right. so this is very friendly. >> why was the timing right? >> i think from our point of view, the timing is everything in all this stuff, right? we both tried in the last 12 to 15 months to do other things to change the trajectory of our companies, they hadn't been successful that doesn't mean you shy away from continuing to try and we thought the complimentary nature of the two portfolios this is something we have talked about on our board a long time as a possibility. when it was spreentd, it was pretty easy to digest. i think in the environment we are in now, where scale continues to be an imperative and both thought consolidation was inhe have jet table, why not team up and see if we can do it? >> your share holders are rewarding you you the stock is actually up. but there are questions, jeff, about your multiple given what may be sloezer growth as a result of this deal. how do you answer those? >> well, we are a growth company in the way we act and the kind of share holders that hold us. and what we see is a tremendous amount of value that's inside the new york stock exchange. us to, we are looking at equity trading that's at, you know, recent historic lows. we see a lot of money on the sidelines that's waiting to come back in once we have better policy, once we have a little more certainty in the world. we see we are in a zero interest rate environment and interest rates a big part of the trading. >> interest rates a big part of this deal in some ways why is that? >> because if you look at sort of the largest asset classes, the trade, in addition to stocks, many people don't realize that interest rates are traded a lot. obviously, hearing about libor in the news these days, i can liquidity policies going on keeping interest rates low but people will have to manage interest rate risks as those interest rates rise. we want to get ourselves positioned for that what we think is an eventual growth and take advantage of it. i'd said on my call with my share holders this morning, we want to spring load this company as these trends come back into the market, we can really accelerate. >> what does that mean by spring load egg? >> we have got to get ourselves organized, we have got to plan how we can come together. we have been working quite a while on how these businesses could join each other. we think we can affect that pretty quickly. as you know duncan quite well, he's straight shooter, we have been able to really lay out a road map that we think that we can affect so, this isn't a merger where we are hoping that certain things will happen. we really have a strong plan how we are going to take costs out, how we are going to integrate the businesses, how we are going to be prepared for the next business cycle. >> i know jeff as well, a pretty straight shooter, duncan. they have done an awful lot of deals and a lot of companies we hear about. integrating deals is very, very important what gives you the confidence on their past deal making you acted integrations they have done that this can work as well? >> i think it starts always with people. i think the track record is interesting and both of us i think certainly is a good track record of integrating businesses. i think the challenge is it starts with people. if the two of us believe and we have the same plan and we cascade that to the people, which we have already done, you're not going to find a lot of daylight between the two of us. we have always thought consolidation of the derivatives platform is important. it solves a big, complex issue for us on the clearing side to combine our interest rate complex with ice's largely energy and commodities platform and we are both very committed to keeping the nyse floor, keeping the nyse brand, continuing to have new york be one of the focal points of the company and going to be like any other multinational company. going to have a big presence in a lot of places. give than the two of us are on the same page, i'm not worried about the integration risk at all. you agree with that? >> totally agree. >> confident you can get this thing done? atlanta, new york, which is it really going to be? where is the real power of this company going to lie? >> first of all, ice has a very big footprint in new york. i happen to live in atlanta but i'm here every week. so, we run a global company -- >> you do know this is the financial capital. >>> it s and if you, by the way, ever want to own -- >> no offense toal. >> you ever want to own a brand in the financial services industry, this is the brand. and i do come from atlanta, where coca-cola and home depot and cnn and other strong brands reside. and so i realize the power of a brand. >> what gives you the confidence? by the way, a $450 million cost synergy number is what you are using, includes 150 million you have got under way, correct? 300 million is the real number, cost synergy? >> i think in fairness, we are looking at what duncan and his team are doing and we have -- we can rejigger some of the parts and things that they are doing to make it much more certain at that 150 that they are already working on will come out of the deal. so oh you know, in fairness, i don't think the market has rewarded nyse euronext for the cost savings that they have planned. i think as we articulate how we can do that together, the market's going to see that these are actually real and can come out quickly. >> how many job cut russ we potentially talking about, duncan? >> we know we are going to be asked that lot. you think about it coulds because of the complementary nature of the portfolios, ice isn't in the businesses that we are standing in the middle of right here. so very little in that business. ice isn't in the businesses of the european equities business. so, you would assume a lot, i said to my own team this morning, obviously combining you the two derivatives platforms in europe, a cost takeout there the 150 we have already got and a lot of the other things comes not so much from job cuts but, for example, we don't need two boards we don't need two auditors, we don't need two this, we don't need two that. you will find a lot of the corporate costs will naturally fall out as they would in any merge. i don't think you're going to hear us talking much about job cuts, particularly over here, because it is not going to be about that. and i think that's -- i think that's -- that's an honest assessment of where we are right now. >> you agree with that? people here shouldn't be worried? >> shouldn't be worried. in fact, they should be thrilled. we are going to really use this now as a center of the brand of what we have. this is the most important brand, the most important business in the trading space. very few of your audience probably have ever even heard of my company, frankly. nobody has not heard of new york stock exchange. so we think just that alone will help open global opportunities for us that ice hasn't -- >> called the combined company the new york stock exchange? >> we don't know what the combine is yet. >> the names. you guys -- >> we did this -- >> put our pencils down about an hour ago. >> gentlemen, i appreciate your time. thank you. jeff sprecher, duncan niederauer, send it back to you you carl. >>> philly fed, existing home sales and lei, breaking news on all three economic reports and the market reaction at the top of the hour. lt minute. can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? 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[ all ] i'm with scottrade. >>> welcome back to "squawk on the street." we have december, the last three of the year on philly fed that manufacturing activity, a big surprise. looking for down two or three ended up with up 8.1. that is the best read since april. if you look at the entire year, the range was minus 1660, that was june, the weakest. the best was march, up 12 and a half. now, look at leading indicators that is a november number, spot on with the negative expectation minus .2 and indeed it is minus .2. we didn't see a whole lot of movement on the equities on the interest rates based on these number bus philly fed is a good way to finish up the year, at least on that index. now going to toss it back to carl. >> a lot of information there. >>> increasing home sales jumped 5.9% month to month in never, well above expectations of maybe 2% gain. seasonally you an annual rate of 5.04 million, from a slightly downward revised october 4.76 million. the 17th consecutive month of annual gains. sales are the highest now since november of 2009, but that was a blip due to the home buyer tax credit expiring. take out that one-month blip, the highest sales pace we have seen since july 2007. slight gain due to a low inventory out west. speak of inventory, 2.03 million homes for sale nationwide, down 3.8%, month to month, 23% a year ago to a 4.8-month supply, the lowest since september of '05. that is good for prices. the median existing home price in november, 180,600. that is an increase of 10.1% year-over-year. but remember, this big jump is due largely to a change in the median mix of homes selling. sales of homes over $750,000 up 50% from a year ago. sales of those under $100,000 down 4% from a year ago. so again, the big jump, 5.9% month to month in november. guys? >> thank you very much, diana olick. we should note that the home builder stocks made a little bit of a turn around on those numbers. get reaction to those better-than-expected existing home sales numbers. bob pisani joins us now with the man who runs the big pest real estate firm in the united states. >> rich and smith. thanks very much. chairman, president and ceo of realology. thanks for joining us. you are in your headquarters in parsippany, new jersey. must be a happy man. good numbers here. sales highest since november 2009. price is up. your reaction? >> bob, these are very good numbers. again, a clear indication that we are in the early stage of a housing recovery. they are very, very strong numbers. >> particular lynn ceased with the increases home but study home price. still something like 10 million homes under water, they have more on the mortgage than the home is worth, but this has got to be very helpful. eventually the 10 million homes come down, continue to see the price increases. is that correct? >> that's correct. in fact, in core logic, a data service for real estate, in their september report, they indicated a 5% increase in sales price would relieve 2 million homeowners of that negative equity position. presumably, those 2 million home owners can come back into the market as inventory, indicated by danni idiana, a natural part correction process earthquake not a surprise to us. demand is outstripping supply and price is responding to that. so, this is as it should be if you are in early stage recovery which we strongly r. >>> a modest rise in prices, richard, maybe 5%, of those 10 million homes, significant portion may go in the money that would be helpful, would it not, for consumer sentiment and people's attitudes in general? >> yeah, they are cleaning up their balance sheets. i think that's important again, for a 5% increase in average sale price, 2 million of that 10.8 would come back into the market. they are no longer a negative equity positions, they can sell their homes. consider out of the 10.8 million, that ranges from being underwater in equity flat to 25%, 5% increments, the vast majority of those home owners are going to go back into the money and be available for inventory in the not too distant future. >> distressed homes still about 25% of all sales, my understanding, richardsome that continuing to come down? it was in the 30s a year ago. what's a number that you think we are going to attain in the next year or so? >> i think distressed sales i think are a little lower than that around 22, 23% of the market. that's going to continue to decline. there are fewer homes that are in distressed positions. i think it will revert to the norm at some point, which is about 5 to 6% of the market. >> mr. smith, a quick balance sheet question from me. i mean, you know, you're upped by private equity until not that long ago. average cost of interests i think is in the mid-7% range s there an opportunity you see to refinance some of your outstanding debt and if so, what will that do to your ability to generate cash? >> you're right. we reduced our debt by about 40%, our interest expense by about 50% at the ipo. there are no near-term maturities we need to worry about our cost of funds is about 7.8%. there will be more than adequate opportunity in the future to refinance. again, as you heard in our ipo, our primary goal is to pay down debt and i can say that three times 'cause that's the emphasis we have placed on paying down debt. so that will come in due course, but again, there's no near term maturity problems for us. >> can you give us a senses as to your leff ram to home prices, for every 1% increase in home price, for example, what does that mean for the company's cash flow? >> that's an interesting question. 1% either size or price, cause we are paid on the average sales price. we are paid on sales volume. we have indicated in the past that ranges from about 11 to 12 million at the ebidta line, fairly mature. >> can you give us some indication what, if any, affect has sandy month northeast? talk about mortgage rates in 2013? we have seen bond prices come down in thes last month or so, that might lead to an increase in mortgage rates in 2013. >> they are extraordinarily attractive now. that has given try the sales activity we see now. people are i'llizing the rates aren't going to be here forever. the mortgage rate front, very good shape this year, i assume very good shape next year. as to the hurricane, we were very concerned as most businesses in the path of the hurricane, it has not had an impa impact thrust far. we were very surprised both on unit volume and also price. we expect there will be a delay and a deferral of closings so it is about probably going to be timing at the end of the day. the exception would be homes destroyed. >> any comment -- we have to let you go comment on your stock price, up 50%, one of the winner ipos this year? >> we are very thankful. we try not to pay attention to that focused on the revenues and earnings and let the market determine what the price will be. we are very pleased. >> richard smith, thanks very much. appreciate you joining us. >> thanks, bob. >>> right after break, a double dose over storms are brewing. talk the latest round of fiscal cliff negotiations and winter storm. how do that affect your holiday travel plans? >>> still ah
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that violent storm sandy. 700,000 or 800,000 homes destroyed in new jersey and new york alone. when irene struck, we acted very quickly. we didn't look and say, well, let's see, alabama has two republican senators, mississippi has two republican senators, texas has two republican senators -- >> while the political ping-pong in the nation's capital continues, senate majorities lead are reid says we're not going to take up the bill, calls it a nonstarter. and the plan b vote could come at any time. stephanie, what the heck is going to happen here? you're getting more of the same out of dc. >> i think the market will continue to be volatile. you'll continue to see this political jockeying. and you either have trade this by it minute or you have to take along are term approach and you have to focus on the fundamentals of the u.s. economy, global economy and company specifics. >> i think there's a plan c that allows to extend the middle class tax cut for those making $250,000 or less. and we angsed the amt question as well. there is this plan c and i think you fall back on that. >> the w
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Dec 20, 2012 4:00pm EST
the floor of the new york stock exchange. stocks higher today on wall street as the close settles out. we see some money coming into this market. investors still hoping for a deal in washington to avoid the fiscal cliff. take a look at how we're settling on wall street. as we saw money moving into equities in the last 20 minutes pushing the dow jones industrial average up to 60 points higher at the close at 13,312 on the dow jones industrial average. nasdaq also finishing in the plus column with a gain of six points, and the s&p 500 up about eight points, one-half of 1% at 1433. closing in on the fiscal cliff deadline still with no deal in sight, let's find out how you should be investing in the face of the fiscal cliff fiasco. we want to dig deeper into the nyc/i.c.e. deal as well announced today, that it means for you and the global exchanges. gentlemen, welcome. thanks soechg for joining us. >> thanks. >> thanks for having me. >> let me kick this off with you in terms of the fiscal cliff. give me your strategy, deal or no deal? >> i think there will be a deal. this plan "b" tha
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Dec 19, 2012 11:00pm EST
? >> yeah. >> will we see these things in new york? >> you may see them in new york, but the best example we talked about last time was the pub, the pub idea. >> yes. >> we had that and started out in one and now have 55. turns out people enjoy getting together and gathering and relaxing after work. >> okay. now, you also did a study most recently, a lot of -- a couple guys joked. ask him about whole paycheck and a lot of what i buy at whole foods is now cheaper than local merchants. >> right. we've talked about this. work really hard on our price competitiveness. quality and value, quality and value, it's always a dance. i think we are fundamentally more competitive. and i'm looking you in the eye and saying, hey, we are going to be competitive on like product because we're going to continue to grow the company. >> you have been doing terrific work rolling out private label. >> right. >> is there a balance? some people want to see those branded in the store, they don't want all private label. other people, some of the branded companies, they can't be that happy you're competing d
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the floor of the new york stock exchange for "squawk on the street" to see this new acquisition dynamic play out. today nyse agreed to be acquired by intercontinental exchange, a new upstart with not even a dozen years of trading under its belt. this went from $24.32 and change, had a fantastic appreciation, which shows you how an icon being american business can be worth much more than it's trading for, providing a competitor gets to acquire it. separate these companies, know what they are? they're part of a dog eat dog unverse of exchanges and an industry with way too much capacity. together they become the global power house that can dominate futures trading. in other words, this is a dodd-frank legislation made me do it deal. it shows both companies are willing to do what's right for you, the shareholders, even our f our leaders aren't willing to do what's right for you, the taxpayers. sadly the new york stock exchange is something that we used to come into a newer company because the equity business, which is its bread and butter, has shrunk and changed dramatically. it's k
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